Study Reveals That ‘Private Crowd’ Models are Gaining Traction with Large Organizations with Lower Risk and Higher Quality
Specific findings of the study can be found here and include:
- Large corporations are adopting crowdsourcing as a model to support new areas such as content localization, translation to replace traditional BPO and contingent labor staffing models
- Crowdsourcing offers significant economic advantages – up to 70 percent savings – compared to a similar outsourced model in both onshore and offshore service geographies
- Given the “on-demand” nature of crowdsourcing and the ability to access qualified, globally distributed talent more quickly, employers enjoy compelling wage cost advantages, higher utilization and lower total costs of recruitment, training, supervision and turnover.
- Mature enterprise crowdsourcing benefits from a third-party intermediary that provides governance, quality assurance and contractor management infrastructure
The study also cited companies that are leveraging crowdsourcing for as much as 50 percent of their product-related projects, such as packaging, design, marketing, research, testing, engineering and technology.
“We are witnessing a second fundamental inflection point for crowdsourcing where large corporations in a post-recession era are increasingly using global professional crowdsourcing services in new application areas, often as a cost-effective alternative to traditional BPO,” said Sarthak Brahma, Practice Director, Pricing Assurance, Everest Group. “Our study finds that crowdsourcing utilization has evolved from small- to medium-sized businesses to an increasingly accepted business practice for large corporations. As cost advantages are progressively augmented by greater accountability, quality assurance and timeliness assurances, the ‘on-demand’ talent model will continue to gain a greater foothold.”
Enterprise crowdsourcing is designed for any company with large-scale contingent staffing needs. It allows corporations to leverage a broad range of creative and technical skills from a pre-qualified global talent pool or “private crowd” to manage and complete business projects. Increasingly, managed service providers are delivering the necessary project management, risk mitigation, contracting and payment mechanisms to allow enterprises to effectively leverage crowdsourcing.
“One effect of the recent global recession is that companies are shifting from ‘job-based’ hiring to ‘task-based’ resource management. This Everest Group study is a valuable resource for organizations that are looking for new ways to reduce costs and increase flexibility through a qualified, managed community of global resources,” said Paul McBride, General Manager Global Crowdsourcing and Search, Lionbridge. “As a pioneer in global crowdsourcing, Lionbridge is helping a growing number of large organizations enjoy the benefits of this new model which include lower overhead and recruiting costs, output-based payments and access to a greater pool of qualified, globally-distributed experts to address new offerings.”
The Everest Group study anticipates an increased demand for professional services providers that are capable of managing the resources of a private crowd to better enable crowdsourcing engagements. In order for buyers to feel secure in crowdsourcing relationships, Everest Group noted that vendors will need to engage with clients as enterprise crowdsourcing service providers, capable of managing private crowds.
The study also notes that the main business case for enterprise crowdsourcing utilization is relatively low-cost compared to both contingent labor staffing and traditional outsourced labor models. Whether deployed as a spot solution for low end tasks or more broadly viewed as an emerging alternative to traditional sourcing, the advantages are delivered through dramatically lower labor costs and the absence of employee benefits, training or supervision costs, as well as investments in infrastructure, facilities or support. Crowdsourced engagements also offer 100 percent utilization due to the on-demand nature of work being undertaken.
The study also concluded that if crowdsourcing models are to be adopted more broadly by larger enterprises, solutions providers must create a compelling proposition beyond pure cost advantages. The areas most cited include: service level management, oversight and protection of intellectual property, closely mapped recruiting skills, proven ability to perform due-diligence checks on works, arbitrage wage structures and payment and overall project management and accountability.
Lionbridge Technologies, Inc. (NASDAQ: LIOX) is a provider of translation, development and testing solutions. Lionbridge combines global resources with proven program management methodologies to serve as an outsource partner throughout a client’s product and content lifecycle – from development to translation, testing and maintenance. Global organizations rely on Lionbridge services to increase international market share, speed adoption of global products and content, and enhance their return on enterprise applications and IT system investments. Based in Waltham, Mass., Lionbridge maintains solution centers in 26 countries and provides services under the Lionbridge and VeriTest brands. To learn more, visit http://www.lionbridge.com.
About Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms, in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com.